The October issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Wednesday morning, features the articles: "MMFs Turn 50 But Zero Yields, Reform Talks Dim Celebration," which discusses the birth and present challenges of money market funds; "Bond Funds: Junker, Roever, Walczak on Ultra-Shorts," which quotes from our recent Bond Fund Webinar; and, "Tax Exempt Money Fund Liquidations Hit State Funds," which discusses the consolidation gripping Municipal MMFs. We've also updated our Money Fund Wisdom database with September 30 statistics, and sent out our MFI XLS spreadsheet Wednesday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our October Money Fund Portfolio Holdings are scheduled to ship on Friday, October 9, and our October Bond Fund Intelligence is scheduled to go out Thursday, October 15.

MFI's "MMFs Turn 50" article says, "Money market mutual funds should be celebrating their 50th birthday this month, but the party is somewhat muted given the myriad challenges they now face. Reserve Primary Fund, which famously 'broke the buck' in 2008, became the first money fund when it launched in October 1970. But Reserve is in the news again as regulators and others discuss yet more potential regulatory changes."

It continues, "Of course, turmoil, regulatory change and dramatic moves in interest rates are nothing new to money funds. While their first decade and a half was marked by oil price shocks, inflation and rates approaching 20%, their most recent decade-plus has been one of zero yields and dramatic market events. Both periods saw a series of regulatory changes, marked by Rule 2a-7's official birth in 1983, and the Money Fund Reforms of 2010 and 2014 (put into effect in 2016). In the interim, MMFs experienced huge growth along with other types of mutual funds in the '80's, '90's and '00's."

Our latest "Profile" reads, "Late last month, Crane Data hosted its latest online event, Bond Fund Webinar: Ultra-Shorts and Alt-Cash. The hour-long session, led by Peter Crane, featured a panel including J.P. Morgan Asset Management's Cecilia Junker, UBS Asset Management's David Walczak and J.P. Morgan Securities' Alex Roever. The discussion involved ultra-short bond fund and separately managed account investment strategies, the latest on flows and assets, and the search for yield in the current zero yield environment. (Click here to hear the Bond Fund Webinar replay, and register here for our next virtual event, Money Fund Symposium Online, which will be held on Tuesday, October 27 from 1-4pm ET.)"

Crane comments, "You saw $1.2 trillion move into money funds but $350 billion has moved out over the last few months. Some of that money is starting to seek alternatives, to seek higher yields. Bank deposits have [also] had a huge cash buildup as well, [so] there's a tremendous amount of cash.... A big chunk of that is, as we’ve seen in the past, yield sensitive and should start moving into ultra shorts and other options as it scrambles for yield."

He explains, "Bond funds have had just tremendous inflows.... Inflows into ultra-shorts have been strong, but the big money in bond funds is out in the Core, the Intermediate, the High-Yield. Looking at the segments ... Conservative Ultra-Shorts and Ultra-Shorts are about $100 billion each. Combined ... you're talking about $200 billion dollars. When you look at the Short-Term space, it's double that, $400, maybe $500 billion depending on who's counting. And then Intermediate is double that again. The Conservative and Ultra-Short spaces have been growing rapidly, they're up 20% ... and ETFs are up 30%."

The "Tax Exempt MFs" article tells readers, "Consolidation continues to grip the money fund space, particularly Tax Exempt MMFs. Today's Wall Street Journal covers the topic in its piece, 'Coronavirus Pandemic Hastens the Demise of at-Risk Municipal Money Funds.' They say, 'In September, Vanguard Group told investors it would shutter New Jersey and Pennsylvania-focused funds. Bank of New York Mellon's Dreyfus liquidated one state-specific fund last month and in August, Federated Hermes said it would wind four down in February.'"

The piece continues, "The Prospectus Supplement for the $1.8 billion Vanguard Pennsylvania Municipal Money Market Fund and the $1.2 billion Vanguard New Jersey Municipal Money Market Fund tells us, 'On Sept. 24, 2020, the board ... of the Vanguard Pennsylvania Municipal Money Market Fund and the Vanguard New Jersey Municipal Money Market Fund approved a proposal to liquidate and dissolve the Funds on or about November 24, 2020.... In anticipation of the liquidation ..., the Funds will be closed to new investors at the start of business on Sept. 25, 2020.'"

The latest MFI also includes the News brief, "BlackRock to Launch 'Social' Mischler Shares." The release, "Mischler Financial and BlackRock to Partner to Provide Dedicated Cash Management Share Class," announces the 'partnership with Mischler Financial Group, a leading disabled veteran-owned broker dealer' for shares of FedFund and LEAF. It says, "Increasingly, we believe clients are looking to maximize their social impact and partner with minority, women and disabled-veteran broker dealers."

A second News piece titled, "Money Fund Assets Slide Again, Huge Shift from Prime to Govt Occurs," says, "Assets fell again in the latest month, declining $121.2 billion to $4.797 trillion. Prime assets plunged as Vanguard's huge Prime MMF converted to a Govt Retail fund (and renamed Cash Reserves Federal MM). (See our Aug. 28 News, "Vanguard Prime MMF Going Govt.")

Our October MFI XLS, with September 30 data, shows total assets dropped by $121.2 billion in September to $4.797 trillion, after decreasing $42.3 billion in August, $44.2 billion in July, and $113.0 billion in June. Assets increased $31.6 billion in May, $417.9 billion in April and $688.1 billion in March. Our broad Crane Money Fund Average 7-Day Yield remained at 0.03% during the month, our Crane 100 Money Fund Index (the 100 largest taxable funds) also remained unchanged at 0.04%.

On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA was down three bps to 0.21% while the Crane 100 fell two bps to 0.21%. Charged Expenses averaged 0.18% (down from 0.21% last month) and 0.17% (down from 0.19% the previous month), respectively for the Crane MFA and Crane 100. The average WAM (weighted average maturity) for the Crane MFA and Crane 100 was 40 (up one day) and 44 days (up two days) respectively. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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